Cost-Sharing Problem Emerges Over Fighter Jet Project
(Source: The Korea Times; issued July 29, 2019)
Seoul is taking a cautious stance over Indonesia's recent indecisiveness regarding cost-sharing of a joint fighter jet project, saying the two countries are still negotiating.

"The discussions are ongoing between the two countries regarding the cost sharing, but we cannot give further comments on the progress of the negotiations at this point," Deputy Ministry Spokesman Roh Jae-cheon said at a press briefing, July 22.

According to the Ministry of National Defense, Indonesia's contribution to the project is around 1.7 trillion won ($14.44 billion), or 20 percent of the total 8 trillion won. The payment is supposed to be completed by 2026. Indonesia has paid about 220 billion won out of the 520 billion won it was supposed to pay so far. The arrears are around 300 billion won.

The ministry's comments on the issue came after Indonesia's state news agency Antarta reported July 19 that the country was seeking to renegotiate terms of the contract for the joint development of the KF-X/IF-X fighter for both countries' air forces, signed by the two countries in 2014.

Indonesia's Coordinating Minister for Political, Legal and Security Affairs Wiranto was quoted as saying that the country did not have the money to cover its share of the jet project, as it was making infrastructure spending a priority. The Indonesian minister said the country was considering offering CN-235 aircraft from the country's state plane maker PT Dirgantara Indonesia as part of its contribution.

Military and industry sources of the South Korean side, however, said receiving CN-235 aircraft or other equipment in lieu of cash would not be a preferable option.

"The Republic of Korea Air Force (ROKAF) is in need of larger-sized transport planes while the CN-235s are the smallest among carriers," a ROKAF official said. He said the ROKAF already addressed its requirements for a larger size carrier than the C-130, the largest it has been operating. The C-130, produced by the U.S. defense giant Lockheed Martin, is 12.5 meters long, 2.7 meters high and 3 meters wide.

A government official said Indonesia was still willing to carry out the joint project, as it also wants its own fighter jets. He said the project will be implemented as scheduled regardless of Indonesia, as the rest of the 8 trillion won budget is being allocated as planned.

The South Korean government is covering 60 percent of the budget, and Korea Aerospace Industries (KAI) will contribute the remaining20 percent.

"We should also consider that the Indonesian government will be deploying around 50 of the KF-X/IF-X fighter jets once the development is completed," the official said. Out of the 168 fighter jets to be produced, the Indonesian government is planning to purchase 48. South Korea will be introducing 120 of the self-developed fighters.

Military experts said the South Korean government seemed unwilling to ruin its friendly relationship with Indonesia, as the country recently purchased South Korean-made submarines.

In April, South Korea's Daewoo Shipbuilding and Marine Engineering (DSME) and Indonesian shipping company PT Pal reached an agreement to construct three more 1,400-ton submarines, following the first contract for three of the submarines in 2011.

But the Indonesian government's uncertain financial commitment for the fighter jet project is still not a good signal to the South Korean government, Kim Dae-young, a research fellow at the Korea Research Institute for National Strategy, pointed out.

"The core of the KF-X/IF-X fighter jet project is not only about replacing the old planes of the ROKAF but also includes joint investment and development," Kim said.

"If the Indonesian government will not pay its share, there could occur problems including the South Korean government spending more tax money on the project."


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